The Future of the Markets

An interesting post by MLP_is_my_OPSEC on Reddit, which he sent me, and i thought it could be a good idea to share it to get people thinking, added some note at the bottom. The original Reddit post and discussion can be found here:

Buckle up buckaroos, because this is going to be a long and detailed read.

So as I’ve previously stated elsewhere, it is my opinion that the current darknet market model is outdated. The DNM’s are still in their infancy. In the beginning there was the original Silk Road, where users and vendors sent unencrypted addresses back and forth. Today this would be laughed at, and rightly so. Today, users and vendors alike (mostly) use the available technology to remain as secure as possible. This has potentially prevented many, many seizures and arrests.

As time goes on however, things must evolve. As it has happened for people taking their operational security seriously, so too must evolution happen to markets. There are numerous problems with the current model of markets that I will outline below.

Don’t put all your eggs in one basket

It’s pretty well known that the two largest markets are currently Alphabay and Nucleus. They are also currently the two oldest operational markets in the scene. There are many more markets out there to use (just check the market list to see) yet these two have exponentially more users than the other ones. It’s obvious as to why; the larger the market, the more vendors there are, which means more choices for buyers. The same is true for vendors; the more choices that are available, the more users will flock to the market.

So why is this a problem? If you put all your eggs in one basket, and something happens to that basket, your eggs are ruined. In this case it becomes a nearly impossible and frustrating experience to contact your vendor of choice, vendors will be overwhelmed with being contacted by many different people and try to sort out the scammers from the legitimate customers, and both potentially lose a massive amount of bitcoin. Not to mention the time wasted by both parties trying to recover from the loss and get set up on other markets, who all run the current monolithic model.

If you don’t control the private keys, you don’t control yourself

To put it simply, if you don’t have full control over the wallet address you can’t truly call those bitcoin yours. With the centralized escrow model you have to instil trust in a market that they wont exit scam and run with them, or do anything else with your hard earned money. Due to the nature of the DNMs one should should be putting trust into as few things as possible, and the current market model doesn’t flow with that statement. Time and time again have markets exited with thousands, if not millions of dollars worth of bitcoin. Evolution, Abraxas, Middle Earth, Black Bank, East India Company — all are guilty of this. There are many more smaller markets that have done this as well. This is something that can be prevented with multi-sig transactions, but as history has shown not many users are willing to put the effort into learning this.

Ad infinitum

Of course there are other issues in the DNM scene, but these are the big two. Just as single-cell organisms didn’t evolve directly into humans, the technology behind everything we do here will slowly change and adapt too. Small steps.


So where do we go from our current state? There are many possible solutions, but what I’m writing about here is one I believe will be the next step for the community as a whole to take. It will take a massive amount of effort and wont happen tomorrow, but change will come.

Moving away from the monolithic model

As I stated in the previous part, putting all your trust into one system is good for neither the buyer or the vendor. Many people would suggest direct deals or private vendor shops, but these also has a few problems.

  1. Without some unbiased rating system it’s hard to judge the worth of a vendor and how they handle their business
  2. A new vendor cannot possibly gain a reputation
  3. A vendor would be hard-pressed to find new customers to keep their business growing
  4. Users would have a hard time finding the product they need, or a vendor to fill that need
  5. Newcomers would be at an absolute loss as to where they should go and what they should do

So, what about OpenBazaar? Don’t get me wrong, it’s a great technology for selling clearnet things, but anyone who isn’t already into technology will find it too hard to deal with. Vendors would need to permanently host a node to keep their shop open, and buyers would need to download the program in order to even access the shop. I just don’t think it’s a viable option.

So if OpenBazaar and private vendor shops aren’t an option, what then?

Reinventing the wheel, I guess

Why not combine all the options, taking the good from each and blending it all together into something that works for everybody.

  • A single service that users and vendors can sign up for, accessible through the Tor Browser and Tails
  • Levels for users to gauge their “worth”, experience being gained (and lost) by doing things commonly done by vendors and buyers
  • A simple yet sophisticated search engine that will easily allow buyers to find exactly what they’re looking for
  • Darknet social media, integrated into the service and a feed displayed front and center on the main page à la Twitter
  • Private vendor shops that are on-site, searchable using the main service search engine
  • Making users control their own bitcoin. None of their BTC will be stored on the service, so no centralized escrow. 2-of-2 multi-sig and “direct deals” only, with 2-of-3 multi-sig being an option if you want to pay the service a small fee
  • Market being funded from sign up fees for vendors, ads on the service that vendors can purchase, 2-of-3 multi-sig fees, and possibly even donations
  • Heavily detailed knowledgebase covering everything you need to use the site. Written and updated by staff and willing contributors, and dead simple for even the newbiest of newbs to understand
  • Require vendors to have a verified email address on signup, so they can be contacted in case the service goes down

There are probably more features that could make this concept even greater, but a single man cannot possibly think of everything. Again this is all just my opinion on the state of things, yours may differ and that’s okay. I’m just wanting to get a discussion going so we can figure out what the hell we should do to help this scene evolve.

I know there are going to be a few questions so I’ll just answer some of them below.

What about exit scams by vendors?

2-of-2 or 2-of-3 multi-sig. Neither vendor nor buyer has any incentive to not release their side of a 2-of-2 unless they’re just trying to be a costly troll. 2-of-3 will protect the user in case the buyer or vendor suddenly vanished.

What if I do a direct deal and I’m scammed?

The service cannot do anything about that. Exit scams do happen from time to time and that’s a risk we take here. We want more responsibility placed on the users, not the service.

Then why not offer centralized escrow?

That would defeat the purpose of this whole thing. If you can think of a better alternative to centralized escrow that isn’t multi-sig, feel free to present it in the comments.

Were you on meth and/or other substances while writing this?

I inhaled some nicotine through my vaporizer and drank a cup of coffee.

Why don’t you code it yourself?

I’m fucking retarded.

================

DeepDotWeb Note:

So one thing to remember is that every new market model must be simple as possible, people are NOT going to use multisig in its current model, forget about it, not going to happen no matter how many exit scams will occur. They didn’t use TMP and the vast majority don’t use the current implementations (which are much more simple) – there must be an implementation that is as simple as regular escrow, not even 1 more step harder. This is the main issue with DNM evolution, that the money is only where you can find the most simple market model.

mm

TheBitcoinNews.com – leading Bitcoin News source since 2012

Virtual currency is not legal tender, is not backed by the government, and accounts and value balances are not subject to consumer protections. The information does not constitute investment advice or an offer to invest.